Gas prices are predicted to be $5 by summertime, will these prices hurt the economy even more?

I was wondering, would gas prices being up to $5 hurt the economy more? The reason I was wondering this is because with gas prices so high, it might decrease the number of people going on vacation since it would be extremely expensive to pay for gas, so would this in turn hurt the economy since some places that depend on tourism/vacations would not have as high an income.

Mar 7 2011:
In America it is ok to manipulate the markets. I understand that brokers hold tankers full of oil on the high seas in orderto create an artificial shortage and drive prices up and then they sell at the higher price. I am of the opinion that brokers who deal in government and commercial contracts withhold a ludicrous percentage of the price the seller pays to transport goods and leave the transportation people with a small fee for their services. It seems that here it is alright to step on the backs of the transporters in order to get ahead monetarily. Since deregulation all the crooks have crawled out of the woodwork again. This just doesn't work except for the big corporations. What do you think ?

Mar 8 2011:
Why do you call tankers parked offshore "manipulating the market"? I'll bet you personally "manipulate" the market every chance you get: you sell your house when prices are high and hold on to it when they are down; you move to another job when you are offered more money and you stay where you are when nobody offers you more; you buy your cereal at the supermarket that charges the least for it; and so on. The oil business is one of the most competitive businesses in the world. You have to make investments of BILLIONS of dollars looking for oil and you frequently get nothing in return. Your price is completely outside your control and is determined by a bizarre marketplace of traders, speculators, Venezuelans, and sheiks. Gas is gas is gas, so your ability to differentiate yourself from your competition is highly limited. Yes, big oil companies sometimes make big profits, but that is because they are BIG companies. And they are owned largely by retirement funds and small investors, so what is wrong with those people getting a fair return on their investment? Big companies employ no more (and no fewer) crooks than small ones do.

Mar 3 2011:
According to some economists, such as Jeff Rubin, every major recession was caused by an oil shock. The 2008 financial crisis, is no different in his view. His argument is supported by the fact that recession begun late in 2007 in several countries before the US dipped into recession. Thus, high oil prices were the cause of the crisis, and the housing melt down was only a symptom.

So to get back to your question, yes, rising oil prices, if prolonged, will definitely cause damage to economy.
For instance, think about all the goods that are being moved from China to US, all the flowers from Kenya that are flown by airplanes to Europe, as you mentioned traveling, and most importantly food which is derivative of oil. Oil goes up, the costs for the listed above goes up, people have less income to spend, and voila, recession!

Mar 4 2011:
Jeff Rubin is not "some economists". He has been playing the same oil-shocks-cause-recessions song for years, and since oil prices fluctuate and the economy fluctuates, it is very simple to show an apparent link between them.Inflation (a general increase in costs) is caused by one thing and one thing alone: governments printing money. (They don't actually 'print' these days, they 'quantitatively ease'.) More money chasing the same goods and services means people are prepared to pay more for the same thing, so prices go up. A general increase in the cost of living would not be possible if the amount of money in circulation remained the same. Under that scenario, if one thing went up in price, something else would HAVE to come down in response. (The very word "inflation" was originally used by economists in the context of "inflation of the money supply". That caused rising prices, and the media, ever ignorant of anything to do with economics, promptly started labelling price increases as "inflation".)If the US government continues to flood the world with US dollars on a scale never before seen in history, then there will be increases in the cost of living such as you never imagined in your wildest nightmares. Oil prices will, indeed, go up, but so will the price of everything else, whether dependent on oil or not. But what will really be happening is that the US dollar will be regarded with less and less favour, and so will buy less and less. A Big Mac will still be a Big Mac, but you'll need a lot more dollars to buy one.

Mar 2 2011:
Historically, a rapid increase in gas prices causes a temporary dip in driving, but within weeks or months everybody has adapted. Long-term, people tend to buy smaller vehicles if fuel costs remain high, but as soon as prices drop they go back to their SUVs. So perhaps higher prices this spring will cause a drop in tourism in the summer, but if history is any guide it will be temporary.

I'll probably be lynched for this, but... On behalf of those of us who live in the oil patch: Yay for higher prices!

Mar 4 2011:
But how can we adapt if wages don't get higher? For work performed prior to July 24, 2007, the federal minimum wage is $5.15 per hour.

For work performed from July 24, 2007 to July 23, 2008, the federal minimum wage is $5.85 per hour.

For work performed from July 24, 2008 to July 23, 2009, the federal minimum wage is $6.55 per hour.

For work performed on or after July 24, 2009, the federal minimum wage is $7.25 per hour.

At most, people would make not even three dollars an hour that they wouldn't need for one gallon of gas. IF gas prices go up even more, people will need higher wages.

While higher prices may be good for some people, higher prices could also be a sign of inflation and inflation is particularly dangerous because if our dollar becomes even more so worthless around the world, it'll cause some major problems for the U.S.